Kosmos Energy Ltd.

Good day, everybody, and welcome to Cosmos Energy's second quarter 2025 conference call. As a reminder, this call today is being recorded. At this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Cosmos Energy.

Thank you, Operator, and thanks to everyone for joining us today. This morning, we issued our second quarter 2025 earnings release. This release and the slide presentation to accompany today's call are available on the Investors page of our website. Joining me on the call today to go through the materials are Andy Ingalls, Chairman and CEO, and Neil Shah, CFO. During today's presentation, we will make forward-looking statements that refer to our estimates, plans, and expectations. Actual results and outcomes could differ materially due to factors we note in this presentation and in our UK and SEC filings. Please refer to our annual report, stock exchange announcement, and SEC filings for more details. These documents are available on our website. At this time, I will turn the call over to Andy.

Thanks, Jamie, and good morning and afternoon to everyone. Thank you for joining us today for our second quarter results call. I'll start off the call by talking about Cosmos' priorities, reinforcing the key messages I gave last quarter before updating you on progress across the portfolio. Neil will then walk through the financials and the work we've been doing to enhance the resilience of the balance sheet before I wrap up with closing remarks. We'll then open up the call for Q&A. Starting on slide three, as we navigate the ongoing commodity price volatility, our key priorities have not changed. Last quarter, I talked about growing production and reducing costs to prioritize free cash flow while continuing to strengthen our balance sheet. I'm pleased to say we've made good progress this quarter across each of these areas, starting with production. In June, we announced the GIMI floating LNG vessel had achieved commercial operations date, or COD, a key milestone for the GTA project. COD is achieved when LNG production is tested for a period of 72 hours at the annual contracted rate of around 2.45 million tonnes per annum equivalent. The FLNG has a nameplate capacity of around 2.7 million tonnes per annum, and we're targeting reaching that level in the fourth quarter of the year. The project has now lifted 6.5 gross cargoes year-to-date. In Ghana, we're pleased that Drilling on Jubilee has restarted with the first producer well of the 2526 drilling programme now online. Initial gross production from the well is around 10,000 barrels of oil per day, in line with our expectations. We have also optimized the drilling program by accelerating the scheduled rig maintenance to 3Q, which allows us to drill a second producer this year, replacing a previously planned injector. This planned producer well is expected to add further Jubilee production around the end of the year, ahead of four more wells planned in 2026. I'll talk about that alongside 2Q Jubilee production later in the material. In the Gulf of America, the partnership has ruled the Winterfell 4 well with completion operations underway. The well is expected online around the end of the quarter. We are now approaching COSMOS record high production levels with further near-term growth expected as we push GTA towards the SL&G nameplate capacity and bring on more wells at Jubilee and Winterfell. Moving to cost. We focused on three areas and are making good progress across all three. Firstly, on CapEx. CapEx in the first half of 2025 was around $170 million, down around 65% from the first half of 2024, as we come out of a heavy investment period and start to see the benefits of those investments. With a sharp focus on CapEx in 2025, we've reduced our full-year CapEx forecast from around $400 million to around $350 million, with the first half actual supporting this lower forecast as we slow down some longer-term investments. Secondly, on OPEX, the largest opportunity for OPEX reduction is on GTA, and we're seeing OPEX per BOE fall as production ramps up. We're also targeting the refinancing of the GTA FPSO in the second half of the year, and we're working with the operator to explore alternative lower-cost operating models which could further drive down costs across the project. And thirdly, overhead. We remain on track to deliver $25 million of targeted savings by the end of this year, with the full benefit being seen in 2026 and beyond. And finally, the balance sheet, where we continue to prioritize our financial resilience with a focus on cash flow and debt pay down. On liquidity, we're taking steps to address our upcoming debt maturities As part of today's material, we announced we've agreed indicative terms for a term loan of up to $250 million secured against our Gulf of America assets, and we anticipate using the proceeds to repay our 2026 bond maturity. We're also progressing additional financing activities to fund some of our longer-dated maturities. On hedging, we took advantage of higher prices in late 2Q and early 3Q to hedge more 2026 oil production, with 7 million barrels now hedged in 2026. We're looking to hedge around 50% of 2026 production by the end of this year. And finally, on the RBL, to reflect the timing impact of GTA ramp-up costs on leverage, we were granted a waiver from our banks on the debt cover ratio covenant through to March 2026. Neil will talk about all of these in more detail later, but in summary, we're making good progress against our financial objectives. Turning to slide four, which looks at operations for the quarter. Starting with the GTA project in Senegal and Mauritania. Second quarter net production was just over 7,000 barrels of oil equivalent per day, and the partnership lifted 3.5 gross LNG cargoes as previously communicated. As mentioned on the previous slide, the FLNG commercial operations date was achieved in late June. This is an important operational and financial milestone for Cosmos, as it signals the end of us funding the NOC's CapEx on the project. In Ghana, total net production was around 29,100 barrels of oil equivalent per day. GeoWeave gross production of around 55,000 barrels of oil per day was lower than expected in the second quarter, driven by nine days of planned FPSO shutdown, a period of rise or instability following the restart, which has since been addressed, and underperformance of some wells on the eastern side of the field. I'll talk more on the following slides about how the partnership is addressing these issues and the actions being taken to re-establish the full production potential of the fields. As mentioned on the previous slide, the first producer well of the 2526 program was brought online late last month and is performing well. Jubilee gross gas production was around 16,600 barrels of oil equivalent per day in the second quarter. In early June, we announced that we had signed an MOU with the government of Ghana to extend the licenses to 2040. The license extensions are a win-win for the project partners and the government. with partners now planning long-term investments in the fields to maximize value for all stakeholders. We are working with our partners and the government to finalize the documentation targeting completion in the second half of the year. When I met with President Mahama earlier this year, we discussed his desire to reinvigorate the oil and gas sector in Ghana with increased investment in some of the country's most valuable assets. The license extensions on Jubilee in 10 are aligned with that agenda. At 10, gross oil production in the quarter was just under 16,000 barrels of oil per day. In the Gulf of America, net production was around 19,600 barrels of oil equivalent per day at the upper end of guidance, driven by strong performance from the Kodiak and Oddjob fields. At Winterfell, the partnership has drilled the number four well, with completion operations underway, and the well is expected online later this quarter. On Tiberias, we continue to advance the development with our 50-50 partner, Oxy, with FID targeted next year. In actual Guinea, net production was just under 8,000 barrels of oil per day, lower than expectations due to some subsea pump mechanical failures at Sabre. The operator expects the first replacement pump to be installed in the fourth quarter, with production expected to rise thereafter. Turning to slide five. At GTA, we continue to see a lot of positive progress with the project now fully operational. Year-to-date, we've lifted 6.5 gross cargoes, and the cadence of cargo liftings is increasing as production ramps up. Further progress is expected with production expected to rise towards a nameplate capacity of 2.7 million tonnes per annum in the fourth quarter. Production of the project is expected to fluctuate slightly with seasonal temperatures with higher production expected during the winter months when the air and sea temperatures are cooler. Four-year guidance of 20 gross cargoes reflects the slightly slower production ramp-up that we saw in the second quarter and early third quarter. Importantly, the subsurface is performing well, which is a key factor as we plan future expansion phases. As a reminder, there is around 25 TCF of discovered gas in place at GTA. Phase 1 only requires around 3 TCF for 20 years of production at the contracted rate. This is a world-class gas resource with significant running room. The partnership also expects the first condensate cargo late in the third quarter, a meaningful additional revenue stream for the project. On operating costs, both startup and commissioning costs should start to fall away in the second half of the year. We're also progressing the refinance in the FPSO lease, starting completion in the second half of the year. Additionally, the partners are working with the operators to explore alternative lower-cost operating models to drive down costs further. As we look out with Phase 1 now fully operational, the next major opportunity to enhance value is through future expansions. Phase 1+, a low-cost brownfield expansion that leverages the existing Phase 1 infrastructure to enable gas production to double at a fraction of the cost to increase LNG production and domestic gas to our host countries. During an official visit to the U.S. in July, the presidents of Senegal and Mauritania met with President Trump at the White House. President Fay of Senegal spoke positively to President Trump about COSMOS, and our critical role in discovering the GTA field 10 years ago. He also talked about the importance to Senegal of U.S. investment from companies like Cosmos and the joint opportunities that could be created through investment in sectors core to the country's economic growth, such as natural gas. The videos of the meetings are online and worth watching. Turning to slide six, 2025 is an important year for our operations in Ghana as we return to drilling. The timeline on the slide shows the journey we are on to deliver the full potential of the Jubilee field. The first half of 2024 marked the end of the previous three-year drilling campaign, which was done using 4D seismic shot in 2017. At the end of that drilling campaign, Jubilee production peaked above 100,000 barrels of oil per day. In the second half of the year, we saw the start of a 12-month drilling hiatus. resulting in some expected natural decline of the field, which was exacerbated by facility issues that we talked about in detail last year, namely reliability of water injection and power generation. The first half of 2025, the partnership carried out a significant facilities work scope on the FPSO during the scheduled shutdown. While voyage replacement for the first half of the year has been above 100%, Production declines have been higher than anticipated in certain wells on the eastern side of the field, including Jubilee Southeast. Riser-based gas lift was introduced to the eastern side of the field, which has helped to restore and stabilize production, and plans are in place to do the same on the western side of the field in the future. In early 2025, we acquired Mu40 across the field, the first since 2017, to ensure the next set of wells we drill in Jubilee Southeast. are the best targets de-risked with the best data and technology. A key event in the second quarter was the arrival of the rig to commence the 25-26 drilling campaign. In July, we brought the first new well online in over a year, a producer in the Jubilee main reservoir with initial gross production of around 10,000 barrels of oil a day. The 2025 rig program has been optimized to drill a second producer well in the Jubilee main field, following a period of scheduled rig maintenance. The second producer well is expected online around the end of the year. We're excited to see the enhanced imaging of the Fast-Track 4D seismic data now coming through, which we plan to further improve using ocean bottom node seismic, or OBM, which we expect to acquire later in the year. I'll talk more about that on the following slide. As we look forward to next year and beyond, we're back to a more regular drilling cadence with four wells committed in 2026, which will start to benefit from the new seismic. Turning to slide seven, I want to spend some time on this slide talking about the importance of consistent drilling and how the partnership is planning to use the latest technologies to deliver the full potential of Jubilee. Using cutting-edge seismic technology to enhance resource recovery in midlife fields is a growing theme across the industry, with recent communications from some of the majors highlighting the significant role they expect it to play over the coming years. The 4D narrow azimuth seismic, or NAS, shot in the first quarter of the year was the first seismic acquired over the fields since 2017. This new seismic data, processed with the latest technologies, is generating a better understanding of the subsurface through enhanced imaging, which is helping to identify new undrilled lobes and unswept oil. As can be seen on the slide, the modern NAS data on the bottom right shows much greater definition of existing reservoirs and yields an improved understanding of fluid movements over time compared to the legacy seismic in the top right. The improved imaging of the new data also provides greater visibility and understanding of deeper potential. At Cosmos, we've taken the lead in coupling this modern seismic with new AI-enhanced data interpretation and reservoir modeling to maximize recovery. As mentioned on the previous slide, we're planning to acquire OBN data over the field later in the year, which will enhance the velocity model to further uplift the NAS processing. The velocity model inserts to the two images on the slide show the evolution and improvement in clarity from 2017 to the present day, and we think there's more to go with OBM data. The second message on the slide I want to focus on is drilling. We talked at length in the past about the need for regular drilling on Jubilee, a key part of delivering the field's potential, alongside high facility uptime and sustained water injection. As I mentioned, the 2526 drilling program is now underway with the first Jubilee producer, J72, online, and a second Jubilee mainfield producer expected online around the end of the year. Following completion of that well, the rig is scheduled to drill four wells in Jubilee in 2026, targeting well-defined mainfield producers supported by good adjacent well control, similar to J72. Going forward, we expect three to four wells per year will be needed to maximize the field's full potential over a multi-year period and sustain higher production levels. With a license extension MOU, the partnership can now plan on long-term investment in Jubilee, which should also drive a material uplift in 2P reserves. In summary, Jubilee is a big field that we expect will get bigger through regular drilling supported by new imaging and reservoir management technology. Turning to slide eight, the Gulf of America second quarter performance was good, with production at the upper end of guidance helped by strong output from both Oddjob and Kodiak. At Winterfell, the number four well was drilled in the second quarter and is anticipated to come online late 3Q. The well is expected to contribute a net rate of COSMOS of around 1,000 barrels of oil equivalent per day. On our development activity, we, together with Oxy, are continuing to progress Tiberius and outboard Wilcox Discovery, working on improved, lower-cost development plans supported by new OBN seismic that we expect to acquire later in the year. FID would then be targeted for next year. Gettysburg is a discovered resource opportunity we acquired in a previous lease sale in the Norfolk trend. To advance the project, we brought in Shell as a 75% partner and operator and are working alongside them in a joint team to progress a low-cost single-well development that would be tied back to Shell's operated Appomattox platform. That concludes the review of the portfolio, and Neil will now take you through the financials.